Obamacare Window Shoppers Meet Bottleneck in Slow Sign-Up

Call operators answer phones on the first day of Obamacare at an eHealthInsurance Services Inc. call center in Sacramento, California. Photographer: Ken James/Bloomberg

Oct. 4 (Bloomberg) -- Health insurers in the Obamacare
marketplaces are starting to slowly enroll new customers after
computer bottlenecks and window shoppers complicated the debut
of the exchanges.

Molina Healthcare Inc., Cigna Corp. and the other insurers
selling plans in the government-run exchanges are reporting a
trickle of applications. They anticipate sign-ups will increase
as technological issues in the enrollment process are corrected
and consumers gain familiarity with their options.

The 2006 Massachusetts health law that became an outline
for the U.S. Affordable Care Act may show what’s to come. When
that exchange opened, people on average had 18 different
contacts with the website, call centers and other sources
provided by the state before they actually bought a plan.

“What we are seeing is a lot of shopping right now and
very few decisions being made,” said J. Mario Molina, the
chairman and chief executive officer of Long Beach, California-based Molina, which is selling exchange plans in nine states.

Insurance markets for 36 states are being run by the U.S.,
while 14 states and Washington, D.C., have created their own
sites to sell the subsidized medical plans. The government’s
computer networks must collect health data from customers and
compile financial records from seven federal agencies including
the Internal Revenue Service, before routing that information
securely to the insurance companies.

“The best minds at Google, Facebook or Microsoft would
have found this daunting,” said Frank Gillett, a research
analyst at Forrester Research Inc., a Cambridge, Massachusetts-based Internet-technology consulting firm.

Difficult Days

The federal health exchange saw repeated software troubles
and long waits in its first week, as 8.6 million people visited
healthcare.gov to check out the insurance offerings. The 14
exchanges run by individual states, including Nevada and
Connecticut, reported similar delays after opening Oct. 1 as
well.

It may take as much as a month for the exchanges to
adequately deal with daily traffic and load capacity, said Paul
Luehr, a managing director at New York-based Stroz Friedberg
LLC, an Internet-industry consulting firm.

“For someone to run an experiment of this size, it isn’t
as easy as someone plugging in a new server,” Luehr said.
“They’ve got a lot of moving parts.”

Improvements Promised

The government has said it didn’t have the initial capacity
to handle the larger-than-expected number of visitors in the
first days. Since then, it has been adding servers and
reconfiguring systems and yesterday pledged “significant
improvements in the online consumer experience” by next week,
Joanne Peters, a Department of Health and Human Services
spokeswoman, said in a statement.

The application portion of the U.S. exchange website will
be taken off line during off-peak hours tomorrow and Oct. 6 to
fix technical issues and expand the system to handle more users,
making it easier to complete the application process and buy
insurance plans, Peters said.

Portals on the federal exchange that route users to older
computer systems, security limits that may have slowed the
system’s ability to right itself, and an initial explosion of
interest might have contributed to the opening-week delays.

‘IT Geeks’

“When technology doesn’t work, the immediate instinct is
to blame these lazy IT geeks who made a mistake, but the reality
is these things are extremely complex,” said Carter Burden,
founder of Logicworks Corp., a cloud computing and management
company. “If Wal-Mart had not had a website for the last 16
years and just launched on Cyber Monday, that site would
probably fall over as well.”

Advocates for the Affordable Care Act are trying to temper
expectations.

“It’s really the start of a conversation,” Anne Filipic,
president of Enroll America, a nonprofit group created to
promote the 2010 health law, said on a conference call
yesterday. “You don’t walk into a car lot and buy the first
thing you see. People really take their time to weigh their
options.”

While consumers may sign up now, health coverage won’t
begin until Jan. 1. People can enroll as late as Dec. 15 and
still be eligible for coverage as of the first of the new year.

“There’s really not a whole lot of incentive for anybody
to enroll today,” Molina said. “I’d really be surprised if we
had much activity before November.”

Small Amount

Other health insurers said they were seeing applications
come in, though still just a small amount. Cigna, which is
selling plans in four states where the federal government is
running the markets, began to enroll people yesterday, Joe
Mondy, a spokesman for the Bloomfield, Connecticut-based
company, said in a telephone interview. WellPoint Inc., the
largest U.S. health insurer by enrollment, was also beginning to
get customers’ applications through the U.S. marketplaces.

Neither WellPoint nor Cigna would say how many applications
the companies had received. Blue Cross Blue Shield of Louisiana
had a “small number” of applications sent in by the U.S.

“Any applications coming through, however few, were good
news,” Mike Reitz, the chief executive officer of Blue Cross
Blue Shield of Louisiana, said yesterday in a statement. “It
tells us that the government website is beginning to function.”

Consumers are still facing technical issues. Three days
after debuting, the exchanges still wouldn’t allow some users to
create accounts, the first step toward enrolling in a plan.
During testing last month, consumer data being forwarded to the
insurers had information missing, wrong or corrupted, Cigna’s
Mondy said.

‘Initial Challenges’

“We did face initial challenges, those have been cleared
up as of” Oct. 2, he said. The tests and fixes continued until
this week.

The computer system behind the main website is designed to
route data on customers shopping for insurance from seven
federal agencies. A slowdown in data coming from any of those
sources could create a choke point that would bring the entire
system down, said John Engates, chief technology officer of San
Antonio, Texas-based Rackspace Hosting Inc., which helps
companies manage their web traffic.

While the site crash could have been avoided, it probably
would have taken more time and money to develop, he said.

“You could have a very modern web operation, like a Google
or a Facebook, but the behind-the-scene stuff, the databases
where your eligibility info may be stored, that may be a very
old system that wasn’t up to the demand,” Engates said.

Many Issues

Heavy traffic wasn’t the only issue. In Nevada, the
problems that brought the site down on the first day were mostly
technical, said Kevin Walsh, a senior vice president and
managing director at Xerox Corp., which was contracted to build
Nevada’s exchange.

While the Nevada site never passed 50 percent of capacity,
there were bottlenecks where too many people were trying to
complete the same task at once, like creating a new account,
forcing the company to reroute traffic to other servers. The
site also had issues with its database, at one point having to
shut down for a few minutes for repair, and some Internet
browsers weren’t compatible with certain areas of the system.

“Through the course of the day we had some typical bugs
and bumps we were working out,” Walsh said. “We’ve resolved
all of those as of mid-morning.”

Some of those issues may have been avoided with more time.
While the law was passed about three years ago, many technology
vendors had only about a year to build a system that would
typically take two to three years of effort, Walsh said. Some of
the data for Nevada’s site, such as the health plans being
offered, wasn’t available for the programmers until four weeks
ago, he said.

“The real test will come in a month or two because by that
time the exchanges should have a better handle on the daily
traffic and load capacity,” said Luehr of Stroz Friedberg.
“The first few days are always difficult no matter what size
company you are.”